Sugar's Sharp Slide Helps FAO Food Price Index Drop
Again

The FAO Food Price Index continued to decline in
March, dropping 1.5 percent from February and 18.7 percent (40 points)
below its level a year earlier.

A sharp fall in the price
index for sugar - which reached its
lowest level since February 2009 - together with dipping prices
for vegetable oils, cereals and meat, more than offset a rise in
dairy prices and contributed to the lower index, which in March
averaged 173.8 points.

The FAO
Food Price Index is a trade-weighted index that tracks
prices of five major food commodity groups on international markets.
It aggregates price sub-indices of cereals, meat, dairy products,
vegetable oils and sugar.

Abundant supplies and rising dollar pushes down international
prices of most food commodities

The FAO Sugar Price Index averaged 187.9 points in March, down
a sharp 9.2 percent from February. This was mainly due to improved
crop prospects but also the continued weakening of the Brazilian
currency against the US dollar, which is supportive to exports.

The FAO
Cereal Price Index averaged 169.8 points in March, down
1.1 percent from February and as much as 18.7 percent below its
level a year earlier. The downward trend in 2015 has been mainly
due to large export supplies and mounting inventories, in particular
for wheat and maize.

The FAO Vegetable Oil Price Index averaged 151.7 points in March,
nearly 3.1 percent below the February level and reaching its lowest
value since September 2009.

The FAO Meat Price Index averaged 177 points in March, down 1
percent from its revised February value, while the FAO Dairy Price
Index rose in March for the second consecutive month to average
184.9 points, up 1.7 percent from February.

World cereal supplies boosted by record crops in 2014

Meanwhile, the cereal output estimate for 2014 was raised to 2
544 million tonnes mainly due to a larger than anticipated maize
harvest in the European Union, according to FAO's latest Cereal
Supply and Demand Brief. If confirmed, global cereal output in
2014 would outstrip the 2013 record by 1 percent.

Looking ahead to the 2015 season, global wheat production is expected
to reach 722 million tonnes in 2015, around 1 percent below the
current estimate for 2014, mainly due to reduced plantings in the
EU. While China, India and Pakistan are all expected to harvest
close to 2014's record levels, production is predicted to decline
in the Russian Federation and Ukraine.

As for coarse grains, plantings are only about to start in the
northern hemisphere. However, early indications in the southern
hemisphere, where crops are more advanced, point to a decline in
2015 production from last year's high levels. In particular, South
Africa's maize production is expected to decline sharply, by 33
percent, following severe precipitation shortfalls earlier this
year.

Rice production prospects for 2015 are generally positive in the
southern hemisphere countries, with sizeable increases forecast
in Indonesia and Sri Lanka in Asia and Colombia and Paraguay in
South America. In Australia, by contrast, output is officially
anticipated to fall by 18 percent, reflecting lingering shortages
of irrigation water.

FAO's forecast for world cereal utilization in 2014/15 has been
raised by nearly 17 million tonnes since March, to 2 493 million
tonnes. The increase largely reflects historical revisions in China
and India.

The forecast for world cereal stocks by the close of crop seasons
ending in 2015 has also been revised up sharply since last month's
report and now stands at 645 million tonnes. The increase mainly
reflects upward revisions to wheat and maize stocks in China.

Based on the current forecasts for cereal stocks and utilization,
the cereal stocks-to-use ratio is expected to reach 25.9 percent
in 2014/15, its highest value since 2001/02.